By Deena Beasley
Feb 4 Gilead Sciences Inc, which
recently began selling a new hepatitis C drug seen generating
billions of dollars in sales, posted a better-than-expected
quarterly profit on Tuesday as sales of its flagship HIV drugs
beat Wall Street estimates.
Fourth-quarter net income rose 4 percent to $791.4 million
from $762.5 million a year earlier. Adjusting for one-time
items, the California-based company earned 55 cents a share,
which beat the average analyst estimate of 50 cents a share,
according to Thomson Reuters I/B/E/S.
Revenue rose 20 percent to $3.12 billion, ahead of the
average Wall Street forecast of $2.85 billion.
Sales of hepatitis C drug Sovaldi, which was approved by
U.S. regulators in early December, totaled $139.4 million for
Gilead declined to estimate 2014 sales of the drug but said
demand is strong and broadly based. "We've got a well-tolerated,
highly effective cure," said Kevin Young, head of commercial
operations at Gilead. "This is transformational medicine."
RBC Capital Markets analyst Michael Yee said he expects 2014
Sovaldi sales of $6 billion.
In the United States, the drug is priced at $84,000 for a
12-week course of treatment. The U.K. price is about $57,000 -
likely the benchmark for European countries overall - while the
price in Germany is slightly higher at around $66,000, Young
"It looks like the prescription trend we've all been
watching was spot on for the revenue trajectory, which means
that there's going to be off-the-charts numbers this year," said
Sanford Bernstein analyst Geoffrey Porges. "And behind all that
the HIV business is chugging along nicely."
The World Health Organization estimates that about 3 percent
of the world's population has been infected with the hepatitis C
virus and that more than 170 million chronic carriers are at
risk of developing liver cirrhosis, liver cancer or both.
The often-undiagnosed virus is transmitted through
contaminated blood. While U.S. infection rates have dropped
since the early 1990s - due in part to the introduction of blood
and organ screening - many older adults remain at risk,
according to the Centers for Disease Control and Prevention,
which has called for baby boomers to be routinely tested for the
Gilead excluded sales of Sovaldi and other hepatitis C drugs
from its forecast for 2014 product sales, which it projected
would increase between 6 percent and 8 percent from 2013 to
total between $11.3 billion and $11.5 billion.
Analysts have forecast the company's full-year 2014 revenue
at $14.66 billion.
"It's hard to imagine that they won't exceed $15 billion or
$16 billion with Sovaldi," Porges said. "Revenue is going to be
up 40 to 50 percent."
The robust early Sovaldi sales provided further evidence
that thousands of hepatitis C patients had put off treatment
while awaiting newer therapies that did not require the use of
injected interferon, which causes miserable flu-like symptoms.
For the past two years Vertex Pharmaceuticals Inc's
Incivek owned 75 percent of the hepatitis C market with annual
sales in excess of $1 billion. By the fourth quarter of last
year with the approval of Sovaldi, Incivek sales all but
evaporated, plunging some 90 percent to just $19.3 million.
Gilead's fourth-quarter sales of HIV drug Atripla rose 2
percent to $933.6 million, while sales of an older product,
Truvada, fell 2 percent to $832.7 million. Sales of the
company's newest HIV drug, Stribild, rose 409 percent to $203.8
Shares of Gilead, which rose 4 percent to close at $82.02 in
regular Nasdaq trading, were down 27 cents at $81.75 after
hours. Over the past 12 months, the stock has nearly doubled.